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Junk Bonds : How High Yield Securities Restructured Corporate America - Glenn Yago

Junk Bonds

How High Yield Securities Restructured Corporate America

Hardcover

Published: 15th November 1990
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Junk bonds burst into the nation's headlines as the fastest growing and most controversial financial instruments of the 1980s. Branded with an unflattering nickname, these high yield securities were tarnished in the public eye by waves of negative publicity. Critics cast the financiers and entrepreneurs who pioneered their use as symbols of a decade of greed and financial excess. By the end of the 1980s, the heyday of junk bonds had seemingly come to a close with the conviction of junk bond pioneer Michael Milken and the bankruptcy of Drexel Burnham Lambert, the brokerage that dominated the high yield market. But the controversy surrounding junk bonds continues.
Now, in Junk Bonds, business professor Glenn Yago turns the tables on conventional wisdom about this new financial technology. He offers the first systematic examination of the facts about high yield securities. His analysis provides hard evidence that demystifies junk bonds and explodes many of the popular myths that surround them.
Junk Bonds sheds light on the role of high yield financing in what Yago calls the democratization of capital. Before the advent of junk bonds, only companies with an "investment grade" rating--five percent of the 23,000 American companies with sales over $35 million--had access to long term capital. In effect, the author argues, 95 percent of American companies were denied the means to finance growth and business development. Yago shows how junk bonds changed all that, breathing life into thousands of American companies that had been shunned by the capital markets. His research demonstrates that these "junk" companies outperformed many Fortune 500 firms in job creation, product development, sales, and business innovation.
The real contribution of junk bonds, according to Yago, was to improve the productivity and competitiveness of American business by restructuring companies in the wake of the corporate conglomerations of the 1960s and 1970s. His findings show that divestitures by companies financed with high yield bonds were not necessarily destructive. Many sold-off units flourished as independent enterprises at a time when numerous "investment grade" companies stagnated or closed plants or fired workers. This restructuring of corporate America has enabled businesses to compete in a changing international environment, benefiting managers, workers, stockholders, and investors alike.
Junk Bonds provides readers with a scholarly analysis that shears away the hype and hysteria that often accompany rapid change. And at a time when Wall Street is under greater scrutiny than at any time since the Depression, this provocative study provides a timely and thoughtful contribution to the debate surrounding junk bonds.

"Yago makes an important and controversial assertion"--Booklist "Three hearty, full-throated cheers for Glenn Yago's book an research. He dispassionately makes a strong case for the passion-drenched junk bonds. I've long believed that high-yield securities were the single most important stimulus to American economic restructuring in the '80s; Yago provides a masterly analysis in defense of such a view."--Tom Peters "Glenn Yago's Junk Bonds is a clear and insightful view of the revolution that has struck corporate America in the 1980s. The author is an academic with his feet planted firmly in the real world."--T. Boone Pickens, Jr. "Glenn Yago has masterfully dissolved the misconceptions and delusions regarding the use of junk financings. Junk Bonds is a coll, well-documented rejoinder to those whose indignation is not matched by their knowledge, and the best source for readers wanting to know just what all the fuss has been about."--Robert Sobel, Hofstra University

Prefacep. v
Acknowledgmentsp. ix
The Rhetoric and Reality of Junk Bondsp. 3
The Origins of Junkp. 14
The Role of Corporate Debtp. 28
Analyzing High Yield Securitiesp. 35
The Impact of Junk Bonds on Industrial Performancep. 49
High Yield Companies in Focusp. 82
Leveraged Buyouts, Corporate Restructuring, and Debt in the 1980sp. 108
Lbo Companiesp. 139
Leveraged Buyouts and Industrial Competitivenessp. 161
Public Policy Responses to High Yield Bondsp. 179
Shake-Outs and Showdowns in the Capital Marketp. 198
Toward a New Economyp. 216
Methodological Appendixp. 225
Bibliographyp. 231
Indexp. 239
Table of Contents provided by Publisher. All Rights Reserved.

ISBN: 9780195061116
ISBN-10: 019506111X
Audience: General
Format: Hardcover
Language: English
Number Of Pages: 272
Published: 15th November 1990
Publisher: Oxford University Press Inc
Country of Publication: US
Dimensions (cm): 24.4 x 16.3  x 2.4
Weight (kg): 0.64